UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________.
Commission File Number 0-8071
URBAN IMPROVEMENT FUND LIMITED - 1974
(Exact name of registrant as specified in its charter)
California 95-6504946
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1201 Third Avenue, Suite 5400, Seattle, Washington 98101-3076
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code: (206) 622-9900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 - Financial Statements
BALANCE SHEETS
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
<S> <C> <C>\
Cash and cash equivalents $3,786,196 $3,818,235
Receivable from affiliates 15,000 -0-
Investments in and advances
to Local Limited Partnerships
accounted for on the equity
method 1,580,592 1,490,998
Total Assets $5,381,788 $5,309,233
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 10,000 $ 5,200
Management fee payable -0- 14,255
Distribution payable 2,096 2,096
12,096 21,551
Partners' Capital:
General Partner - 115
Partnership units
authorized, issued
and outstanding 53,697 52,877
Limited Partners - 11,404
Partnership units
authorized, issued
and outstanding 5,315,995 5,234,805
5,369,692 5,287,682
Total Liabilities and
Partners' Capital $5,381,788 $5,309,233
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
CAPITALIZATION AND PARTNERS' CAPITAL
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
<S> <C> <C>
General Partner Interest - 115
Partnership units issued and
outstanding $ 115,192 $ 115,192
Limited Partners' Interest -
11,404 Partnership units
issued and outstanding 11,404,000 11,404,000
11,519,192 11,519,192
Offering Expenses (1,315,039) (1,315,039)
Distributions to Partners (1,181,501) (1,181,501)
Accumulated loss through
December 31, 1998 (3,734,970) (3,734,970)
Income for six-month
period ended
June 30, 1999 82,010 -0-
(3,652,960) (3,734,970)
Partners' Capital
at End of Period $ 5,369,692 $ 5,287,682
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
STATEMENTS OF INCOME
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
<TABLE>
<CAPTION>
For the Three-Month For the Six-Month
Period Ended Period Ended
June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues $ 49,815 $ 43,943 $ 85,109 $ 61,562
Cost and expenses:
Professional fees 5,000 3,174 10,000 6,851
Management fee 14,255 14,255 28,510 28,510
Other expenses 60,827 32,559 70,827 32,870
Amortization 833 833 1,666 1,666
80,915 50,821 111,003 69,897
Income (Loss)
before equity of
Local Limited
Partnerships (31,100) (6,878) (25,894) (8,335)
Equity in net
income of Local
Limited Partnerships 62,274 63,973 107,904 2,373,908
Net Income $ 31,174 $ 57,095 $ 82,010 $2,365,573
Allocation of net income:
Net income allocated
to General Partner $ 312 $ 571 $ 820 $ 23,656
Net income allocated
to Limited Partners 30,862 56,524 81,190 2,341,917
$ 31,174 $ 57,095 $ 82,010 $2,365,573
Net income allocated to
Limited Partners per
Limited Partnerships
Unit (11,404 units out-
standing at June 30,
1999 and 1998) $ 3 $ 5 $ 7 $ 205
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
STATEMENTS OF CASH FLOWS
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
<TABLE>
<CAPTION>
For the Three-Month For the Six-Month
Period Ended Period Ended
June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income $ 31,174 $ 57,095 $ 82,010 $2,365,573
Adjustments to
reconcile net
income to net
cash used by
operating activities:
Amortization of
initial and rent-up
fees 833 833 1,666 1,666
Equity in net
income of
local limited
partnerships (62,274) (63,973) (107,904) (2,373,908)
Increase in
receivable from
affiliate (15,000) -0- (15,000) -0-
Decrease in trade
accounts payable
and accrued
management fees (9,255) (11,081) (9,455) (22,161)
Total adjustments (85,696) (74,221) (130,693) (2,394,403)
Net cash used by
operating activities (54,522) (17,126) (48,683) (28,830)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Distributions
received 7,074 44,330 7,074 2,297,365
Net advances
repaid by
limited
partnerships 9,570 -0- 9,570 -0-
Net cash provided
by investing
activities 16,644 44,330 16,644 2,297,365
NET INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS (37,878) 27,204 (32,039) 2,268,535
CASH BALANCE
AT BEGINNING
OF PERIOD 3,824,074 3,695,787 3,818,235 1,454,456
CASH BALANCE
AT END
OF PERIOD $3,786,196 $3,722,991 $3,786,196 $3,722,991
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
NOTES TO SUMMARIZE FINANCIAL INFORMATION
June 30, 1999
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
Note 1 - Organization - Urban Improvement Fund Limited (the
Partnership) was formed under the California Uniform Limited
Partnership Act on January 13, 1974, for the principal purpose of investing
in other limited partnerships (Local Limited Partnerships), which own
federal and state-assisted housing projects. The Partnership issued 11,404
units of limited partnership interest pursuant to a public offering of such
units which terminated on December 31, 1974. The Partnership also
issued 115 units of general partnership interest to Interfinancial Real
Estate Management Company (the General Partner).
The Urban Improvement Fund Limited - 1974 prospectus, dated July 23,
1974, specified that the General Partner will have at least a one percent
interest in profits, losses and special allocations, and the limited partners
will share the remainder of the interest in profits, losses and special
allocations in proportion to their respective units of limited partnership
interests. It is the General Partners' intention to allocate, for income tax
and financial reporting purposes, the profits, losses and special allocations
in the ratio of ninety-nine percent to the limited partners and one percent
to the General Partner.
Note 2 - Method of accounting - Initial rent-up fees paid by the
Partnership to the General Partner, deducted when paid for income tax
purposes, are capitalized as acquisition costs of the Local Limited
Partnerships for financial reporting purposes. These costs and other costs
of acquisition are amortized using the straight-line method over the lives
(fifteen to forty years) of the Local Limited Partnership Properties.
Amortization is discontinued when the investment is reduced to zero.
<PAGE>
Repayment of advances and cash distributions by the Local Limited
Partnerships after the Partnership investment has been reduced to zero are
recognized as income by the Partnership in the period received.
Additional advances to Local Limited Partnership after an investment is
reduced to zero are recognized as losses in the period paid.
The unaudited interim financial statements furnished in this report reflect
all adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods presented. All such
adjustments are of a normal recurring nature.
Taxes on Income
No provision for taxes on income is required since all taxable income or
loss of the Partnership is allocated to the partners for inclusion in their
respective tax returns.
Cash Equivalents
Marketable securities that are highly liquid and have maturities of three
months or less at the date of purchase are classified as cash equivalents.
Management of Urban Improvement Fund Limited - 1974
Under the terms of the Limited Partnership Agreement, the Partnership is
required to pay the General Partner an annual management fee equal to
one-quarter of one percent of invested assets or $146,065 (the fee will not
be more than fifty percent of the Partnership's annual net cash flow, as
defined, subject to an annual minimum of $57,020). The Partnership will
also pay the General Partner a liquidation fee for the sale of projects.
<PAGE>
The General Partner of the Partnership is a corporation in which Paul.
Pfleger owns a majority interest. Partnership Services, Inc. (PSI), another
corporation in which Paul H. Pfleger is a majority shareholder, has
contracted with the General Partner and the Partnership to provide certain
management and other services to any projects in which the Partnership
has an interest. In addition, as shown in the following table, PSI has
become the General Partner in two of the Local Limited Partnerships in
which the Partnership has investments:
<TABLE>
<CAPTION>
Date PSI Became
Local Limited Partnerships General Partner
<S> <C>
Notre Dame Apartments March 1977
Capitol Hill Associates December 1978
</TABLE>
Note 3 - Investments in Local Limited Partnerships - As of June 30, 1999
and 1998, the Partnership has investments in nine active real estate
Limited Partnerships (Local Limited Partnerships), which are accounted
for on the equity method. The investment account represents the sum of
the capital investment and unamortized costs of acquisitions less the
Partnership's share in losses since the date of acquisition. The
Partnership discontinues recognizing losses and amortizing cost of
acquisition under the equity method when the investment in a particular
Local Limited Partnership is reduced to zero unless the Partnership intends
to commit additional funds to the Local Limited Partnership.
The Partnership has an investment in one Limited Partnership that sold its
real estate during 1984. This Partnership (Elk Grove Elderly) holds a note
receivable for a portion of the sales proceeds. The note receivable was
paid during the quarter ended March 31, 1998. The Partnership received
$2,253,035 as payment in full of the note receivable. The investments in
Local Limited Partnerships are comprised of:
<PAGE>
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
<S> <C> <C>
Capital contributions $ 6,226,304 $ 6,226,304
Distributions (2,964,823) (2,957,749)
Equity in losses (2,725,142) (2,833,046)
Advances 143,564 153,134
Unamortized costs
of acquisitions 900,689 902,355
$ 1,580,592 $ 1,490,998
</TABLE>
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Partnership has followed the practice of investing available funds not
used in the purchase of properties or in operations into short-term
investments. Interest income resulted from such short-term investments.
The Partnership is dependent upon interest earned and the distributions
and repayment of advances from Local Limited Partners for cash flow.
Under the terms of the Limited Partnership Agreement, the Partnership is
required to pay the General Partner an annual management fee equal to
one-quarter of one percent of invested assets or $146,065 (the fee will not
be more than fifty percent of the Partnership's annual net cash flow as
defined, subject to an annual minimum of $57,020). The Partnership
recorded management fee expense of $28,510 for the six months ended
June 30, 1999 and 1998.
The components of the Partnership's equity in income of the Local
Limited Partnerships for June 30, 1999 and 1998, is summarized as
follows:
<PAGE>
<TABLE>
<CAPTION>
For the Three-Month For the Six-Month
Period Ended Period Ended
June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Income from
investments with
non-zero investment:
Notre Dame $ 45,630 $ 56,900 $ 91,260 $ 103,696
Repayment from
(advances to) part-
nerships with zero
investment:
Capitol Hill 9,570 -0- 9,570 -0-
Distribution
received from
partnerships
with zero
investment:
51st and
King Drive 7,074 7,073 7,074 7,073
Elk Grove -0- -0- -0- 2,253,035
7,074 7,073 7,074 2,260,108
$ 62,274 $ 63,973 $ 107,904 $2,363,804
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
Items 1 through 5 not applicable
Item 6 Exhibits and Reports on Form 8-K
a) None
b) The registrant has not filed a report on Form 8-K during the quarter
ending June 30, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
URBAN IMPROVEMENT FUND LIMITED - 1974
(Registrant)
By: Interfinancial Real Estate Management
Company, General Partner
Date August 13, 1999 Michael Fulbright
(Signature)
By: Michael Fulbright, Secretary
Date August 13, 1999 John M. Orehek
(Signature)
By: John M. Orehek, Senior Vice President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999 DEC-31-1998
<PERIOD-END> JUN-30-1999 JUN-30-1999 DEC-31-1998
<CASH> 0 3,786,196 3,818,235
<SECURITIES> 0 0 0
<RECEIVABLES> 0 15,000 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 1,580,592 1,490,998
<PP&E> 0 0 0
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 0 5,381,788 5,309,233
<CURRENT-LIABILITIES> 0 12,096 21,551
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 0 5,369,692 5,287,682
<TOTAL-LIABILITY-AND-EQUITY> 0 5,381,788 5,309,233
<SALES> 0 0 0
<TOTAL-REVENUES> 112,089 193,013 0
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 80,915 111,003 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> 31,174 81,010 0
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 31,174 82,010 0
<EPS-BASIC> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
